Retirement homes: Attractive option for the elderly

It is a good option to live an independent and activity-filled life, but don't buy it as an investment

The proportion of elderly citizens within Indian society is growing and with it the demand for specially designed residential complexes that cater to their needs. According to a recent report on senior housing brought out by the PHD Chamber of Commerce and Industry, the share of the elderly in India's population had risen from 5.6 per cent in 1961 to 8.6 per cent in 2011.

It is estimated to reach 10.7 per cent by 2021 and 23.6 per cent by 2050. According to the same survey, developers estimated that the size of the sector is estimated to increase from US$ 1.26 billion in 2016 to US$ 7.7 billion by 2030. With old taboos about sending parents to these complexes fading away, many senior citizens are now themselves opting to move to them. However, this decision, which is taken at an advanced age, is a significant one and needs to be arrived at after weighing the pros and cons carefully.

Why are senior citizens moving?  A major social change that is driving the demand for retirement homes is the breakup of the joint family system and growing nuclearisation. Children often migrate to other cities or abroad for work. “Earlier, if someone did not have children or their children lived away from them, a close relative would step in to take care of the elderly. But with the pace of life becoming hectic, relatives don't want this additional burden. Moreover, nowadays seniors want their own space as much as young people do. All these factors are driving them to opt for retirement homes,” says Shashank Paranjape, managing director, Paranjape Schemes Construction Ltd. 

Senior citizens also find the prospect of living among people of the same age group attractive. It takes care of the loneliness they are often subject to in old age and allows them to spend quality time among like-minded peers. “We conduct a lot of activities within our complex for residents which they participate in together. This allows them to bond and develop new relationships,” says Ankur Gupta, joint managing director, Ashiana Housing. Adds Amit Oberoi, national director, knowledge systems, Colliers International India: “Growing affluence also allows senior citizens to go for these options.” 

Retirement homes also rid senior citizens of quotidian worries like cooking, maintenance, etc as most of these services are available. Finally, as A Sridharan, managing director, Covai Property Centre says: “You get to live in a clean and green environment, amid beautiful landscaping, flowers, trees and water bodies, which allows you to be healthier and live longer.” 

Make the right choice: When purchasing a house in a senior citizens' complex, an important consideration is the developer's track record. “Put your money only on those developers who have a demonstrated track record of not just delivering such a project, but also of managing and maintaining such a community,” says Paranjape. Unlike a regular residential complex, the quality of service is very important in such a complex. “A large support system has to be put in place for the residents of these complexes.  Go with a developer who understands and has experience of this aspect,” says Oberoi. The quality of assistance available at the complex should be a key consideration. With time, a spouse may pass away and a person's health may also deteriorate. “With advancing age, people may require access to assisted, memory and palliative care,” says Sridharan. Make sure that such care is available. Also, check tie-ups with nearby hospitals and the level of medical assistance available within the complex.

Financial considerations: Before you move into a retirement home, decide whether to retain or sell your original house. The management of real estate becomes more difficult as one gets older, so selling it off would be attractive. But retaining would give you the option to move back in case you don't like living in the retirement community. You also need to check whether you can afford the retirement home without selling your original house. “One way to check this is to knock off the amount that you will spend on buying the retirement home from your net worth and then see if you have enough left to support all the expenses you are likely to have in old age,” says Vishal Dhawan, chief financial planner, Plan Ahead Wealth Advisors. 

Financial planners also suggest that you should look at a retirement home more as a consumption item rather than as an investment. “Usually you can only sell these houses to other senior citizens, which affects the capital appreciation,” says Dhawan.

Another important financial decision to be made is whether to buy, lease or rent. “Our research has shown that most senior citizens in India like to buy the property because they are mortally afraid of being thrown out by the owner in old age,” says Paranjape. Renting initially would give you the flexibility to move out in case you don't like the project. Another issue is how useful a retirement home will be to your children. While you can bequeath it to your heirs, they will not be able to live in it until they are of a certain age, say, 55 or 60. Their only option will be to rent, lease or sell the house. By the time they can move into it, the property could be around 30 years old and may not be as attractive as more recently-developed options. in that segment.